European Union anti-trust regulators are expected to formally block CK Hutchison Holdings Ltd.’s US$14.5 billion bid for Telefonica SA’s British mobile-phone business within weeks, Bloomberg reports, citing people familiar with the negotiations.
The European Commission wasn’t convinced that Hutchison’s offers to sell space on its network to so-called virtual operators would create enough rivalry to prevent potential price increases, the sources were quoted as saying.
The EU, backed by UK anti-trust and telecom agencies, is holding out for Hutchison’s Three and Telefonica’s O2 to offer to sell part of their network infrastructure to a new rival, the sources said.
Barring a last-minute breakthrough, Hutchison is focusing on whether it could win approval for a bid to merge its Italian operations with VimpelCom Ltd., another deal that would reduce the number of mobile-phone operators from four to three.
The EU opened an in-depth probe into that transaction last month.
Hutchison is already preparing to challenge any EU move to block the UK deal in court, a process that can take years, the Sunday Telegraph reported.
An EU ban may halt a wave of consolidation in the European telecommunications industry after regulators cleared mergers in Germany, Austria and Ireland.
Britain’s antitrust watchdog last week urged the EU to halt the merger of Three and O2, saying it risked “long-term damage to mobile-phone markets”.
Only a sale of mobile network infrastructure to a new network operator would allay their concerns.
Telefonica, Spain’s largest phone company, is relying on the deal to cut its debt load of 49.9 billion euros (US$56.3 billion) as it strives to maintain its credit rating.
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